The Study On The Chinese Supervision System Of Private Equity Funds

Since private equity fund emerged in China, it attains great development and also made agreat contribution to China’s economic development. However, the regulation of PE in China isnot good enough, which also causes some chaos in the economic activity now and impedes thedevelopment of PE. In view of this, we use the theories of law and economics to analyze the realsituation and learn from the foreign experience to table recommendations to improve theregulatory regime in China.There are three parts in this article, the introduction, the body which includes six parts andthe conclusion.The first chapter mainly discusses some related concepts and differentiates the PE from thoserelative concepts. Also we talk about the forms of organization of PE.At the meanwhile, the paperreveals the history of development of PE in China, so we can have a comprehensive view of PE.The second chapter is aim to establish the principle of China’s private equity fund regulation.There are reasons from Law and Economics that PE choose some form if organization, and theyalso help us to understand how to build the regulatory regime. In the real world, the existence ofTransaction Costs makes us know that we should reduce the cost as much as possible. It leads tothe notion of Reasonable supervision that aims to reduce the Transaction Costs.The third chapter mainly talks about the experience of regulation of developed countries. Thepaper introduces three representative regulatory frameworks of three countries including the USA,England and Japan. We can learn a lot from their policies and regimes. As countries that havegreat development in PE, their regulatory experience, whether successful or controversial, is helpful for us. Especially in terms of the qualified investors system and information disclosuresystem.The fourth chapter analyzes the current situation of regulation of our country. And there alsoa lot of problems. The law is not complete. The lack of Industry self-regulation and Dislocation ofthe regulatory authorities also cause great trouble.The fifth chapter discusses how to improve regulation of China’s PE. There measures aretaken to address those problems. We should build the Qualified investors system, and Improve theindustry self-regulation. The last measure we talk about is Information Disclosure.We also talk about the state-owned PE which caused many disputes. At the present stage,state-owned PE makes a significant contribution to the development of the industry of privateequity, but we also need to pay attention to related problems.PE is so important in the modern economic.PE can’t get the sound development withouteffective regulatory regime. In the perspective of law and economics, in a world withouttransaction costs, if we can trade freely, Resource allocation will automatically reach the optimalstate. So, we should stick to the idea to improve the supervision of the legal system as well assome specific systems, such as qualified investors, information disclosure and so on.